What’s Changing in 2026 for Charitable Contributions
The OBBBA introduces significant updates to the tax rules governing charitable contributions, for both individuals and corporations. These changes apply for tax years beginning after December 31, 2025 (so effectively the 2026 tax year) unless noted otherwise.
Here are the major shifts:
For Individual Taxpayers
New “floor” for itemizers: If you itemize your deductions, your charitable deduction will only count for the portion of your gifts above a new threshold: 0.5% of your adjusted gross income (AGI) (calculated without regard to any net operating loss carrybacks).
Example: If your AGI is $200,000, then $200,000 × 0.005 = $1,000. You must contribute more than $1,000 in eligible charitable gifts for anything to be deductible.
Cap on value of deduction for high-bracket taxpayers: For those in the highest marginal rate, the tax benefit per dollar of charitable deduction is reduced. The maximum deduction benefit is limited to 35 cents per dollar donated (i.e., a 35% benefit) even if your marginal rate is higher.
Above-the-line deduction for non-itemizers: If you take the standard deduction (i.e., you do not itemize), beginning in 2026 you’ll be able to claim a “universal” charitable deduction for cash gifts to public charities (not donor-advised funds/private non-operating foundations) — up to $1,000 for single filers and $2,000 for married filing jointly.
Existing percentage limitations remain: The current rules that limit charitable deductions as a percentage of AGI (for example, the 60% AGI cap on cash gifts to public charities) are retained and in some cases made permanent.
Why These Changes Matter
These shifts mean that the value of a charitable donation (in terms of tax benefit) is reduced in many cases for itemizers and high-income donors.
At the same time, the introduction of an above-the-line deduction for non-itemizers expands access to a tax benefit for charitable giving for a much larger pool of taxpayers (those who take the standard deduction).
For nonprofits and fundraising professionals, these changes could affect donor behavior: higher floor thresholds and lower marginal benefits may reduce incentive for big gifts, unless donors plan ahead.
Tax planning and timing become more important. Giving in 2025 (pre-change year) may be more advantageous in some cases.
What Donors Should Do (and When)
Here are practical steps and considerations:
Accelerate contributions: If you are planning significant charitable gifts, consider doing so in 2025 rather than waiting for 2026—because the new floor / reduced benefit will apply in 2026.
“Bunch” contributions: If you are an itemizer, bundling several years’ worth of giving into one year may help you exceed the 0.5% AGI floor and make your deduction meaningful.
Review donor-advised funds (DAFs): Note that the new above-the-line deduction for non-itemizers excludes gifts to donor-advised funds and private operating foundations. If using a DAF, you’ll need to plan accordingly.
Know your AGI: Especially if you itemize, calculate 0.5% of your AGI to know your “floor” threshold.
Coordinate with your tax advisor/financial planner: These changes impact tax planning, giving strategy, and estate planning.
Communicate with your charity: If you give to nonprofits, you may want to ask how the organization views this shift (especially larger gifts) and whether they anticipate changes in donor behavior.
Summary & Final Thoughts
The One Big Beautiful Bill Act ushers in major changes to the charitable giving tax landscape starting in 2026. On one hand, it opens up a new deduction option for those who don’t itemize (which is great). On the other hand, it introduces new hurdles (floor thresholds) and reduces the tax benefit for high earners and itemizers.
For anyone giving (or planning to give) charitably, timing matters, and so does coordination with tax and financial planning. 2025 may represent a “sweet spot” for making gifts under the older rules. Charities and fundraisers alike should be aware of shifting incentives and donor behavior.